Spring 2023 Budget

Business investment and taxation

  • Capital allowances: Full expensing – From 1 April 2023 until 31 March 2026 investments made by companies in qualifying plant and machinery will qualify for a 100% first-year allowance for main rate assets. Companies investing in special rate (including long life) assets will also benefit from a 50% first-year allowance in the year of investment. Expenditure on plant or machinery for leasing is excluded from first-year capital allowances.
  • Additional tax relief for R&D intensive SMEs – From 1 April 2023, a higher rate of relief for loss-making R&D intensive SMEs will be introduced. SME companies for which qualifying R&D expenditure constitutes at least 40% of total expenditure will be able to claim a higher payable credit rate of 14.5% for qualifying R&D expenditure.
  • Update on ongoing R&D tax relief review – The Government is considering responses to the consultation on merging the R&D Expenditure Credit (RDEC) and SME schemes. The Government intends to keep open the option of implementing a merged scheme from April 2024, and will publish draft legislation on a merged scheme for technical consultation alongside the publication of the draft Finance Bill in the summer.
  • The new Audio-Visual Expenditure Credit will replace the current film, high-end TV, animation and children’s TV tax reliefs. Film and high-end TV will be eligible for a credit rate of 34% and animation and children’s TV will be eligible for a rate of 39%. The expenditure threshold for high-end TV will remain at £1 million per hour.
  • The new Video Games Expenditure Credit will have a credit rate of 34%.
  • From 1 April 2023, the headline rates of relief for the Theatre Tax Relief (TTR) and the Museums and Galleries Exhibitions Tax Relief (MGETR) will remain at 45% (for non-touring productions) and 50% (for touring productions). Orchestra Tax Relief (OTR) rates will remain at 50%. From 1 April 2025, the rates will be 30% and 35%, and on 1 April 2026 the headline rates of relief for TTR and MGETR will return to 20% and 25%. The headline rates of relief for OTR will return to 25%.
  • The Plastic Packaging Tax rate for 2023/24 will be uprated in line with CPI, from 1 April 2023.
  • The Government will uprate Landfill Tax rates for 2023/24 and 2024/25 in line with RPI, from 1 April 2024.
  • Air Passenger Duty (APD) rates will increase in line with RPI for 2024/25 rounded to the nearest pound, with short haul international rates remaining frozen. Following a 50% cut in APD for domestic flights in 2023/24, the rate for domestic flights will increase by 50p to £7. The long haul and ultra-long haul economy rates will increase by £1.
  • The Government will uprate Vehicle Excise Duty (VED) rates for cars, vans and motorcycles in line with RPI from 1 April 2023. VED for HGVs will remain frozen for 2023/24. From August 2023, a reformed HGV levy will be introduced.
  • 12 Investment Zones will be launched across the UK, which will receive fiscal incentives and flexible spending powers. None of the 12 Zones are in London.
  • The Government intends to expand local business rates retention to more areas in the next Parliament.
  • Alcohol duties – Duty rates of all alcoholic products will increase in line with RPI. Draught Relief will increase from 5% to 9.2% for beer and cider draught products and from 20% to 23% for wine, spirits based and other fermented draught products. These changes will take effect from 1 August 2023.
  •  The Simplified Customs Declaration Process (SCDP) will be improved, including an extension to declaration deadlines, allowing traders to submit one declaration covering a longer period of time, and increasing accessibility by updating guidance. Government is also considering how to streamline customs declaration requirements and will engage stakeholders later in the year.
  • Government will work with businesses and representative bodies to undertake a systematic review of tax guidance and forms for small business over the next 24 months to make it easier for small businesses to interact with the tax system.
  • The Government will consult in summer 2023 on introducing a voluntary standard for customs intermediaries, with the aim of improving the overall quality of service provided across the sector.
  • A call for evidence at gov.uk for options to reform VAT for the installation of energy saving materials has also been published.
  • Fuel duty rates will be maintained at current levels for an additional 12 months.

Personal tax

  • The Annual Allowance will increase from £40,000 to £60,000 from 6 April 2023. The Government will also remove the Lifetime Allowance charge from 6 April 2023, before fully abolishing the Lifetime Allowance in a future Finance Bill.
  • The starting rate for savings will be frozen at £5,000, enabling individuals with less than £17,570 in employment income to receive up to £5,000 of savings income free of tax.

Reform to boost employment and reduce economic inactivity

  • The Government will provide £4.1 billion by 2027/28 to deliver 30 hours a week of free childcare for eligible working parents of children aged 9 months up to 3 years in England, where eligibility will match the existing 3-4 year old 30 hours offer.
  • A national pathfinder scheme for wraparound childcare will be introduced in England, to stimulate supply in the wraparound market, to support the ambition for all children to be able to access 8am-6pm childcare provision in their local area.
  • Over-50s will be able to access ‘returnerships’, focussing on flexibility and previous experience to reduce training length.
  • An additional £3 million will be invested in the Supported Internships Programme to pilot an expansion to young people entitled to Special Educational Needs support who do not have an Education, Health and Care plan.
  • The Government will provide £11.5 million to help Ukrainians war who have arrived in the UK under the Ukraine Visa Schemes to boost their English language skills and enter employment.
  • The Government will accept the Migration Advisory Committee’s (MAC) interim recommendations to initially add five construction occupations to the Shortage Occupation List (SOL), ahead of its wider SOL review concluding in the autumn. The Government will also review the SOL more regularly.
  • An Occupational Health SME subsidy pilot scheme to support small and medium-sized businesses in England with the cost of purchasing occupational health services will be expanded.

Energy and levelling up

  • The Government will maintain the Energy Price Guarantee across the UK at £2,500 per year for the typical household for an additional three months (April to June 2023). The Energy Bills Discount Scheme will provide all eligible businesses and other non-domestic energy users across the UK with a discount on high energy bills until 31 March 2024.
  • The Government will also provide up to £20 billion funding for early deployment of Carbon Capture, Usage and Storage (CCUS), to help meet its climate commitments.
  • A third round of the Levelling Up Fund will proceed as planned later in 2023 with a further £1 billion to level up places across the UK.
  • Government is considering withdrawing all remaining support for Local Enterprise Partnerships (LEPs) from April 2024. DLUHC and DBT will consult on this decision.
  • 12 Investment Zones will be launched across the UK, which will receive fiscal incentives and flexible spending powers – none of the 12 Zones are in London.